BROOKDALE SENIOR LIVING INC. (BKD): what the price assumes

In the published model solve dated 2026-Q2, anchored at $11.77, BROOKDALE SENIOR LIVING INC. (BKD) is priced for today's economics sustained for ~7.5 years. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-25.

Generated: 2026-09-07 · Exported: 2026-09-09 · Source: https://boothcheck.com/report/BKD

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Solve inputs: computed at a 7% cost of capital; growth searched up to the 25% self-funding ceiling (computed at the 7% minimum rate; the CAPM rate 6% sits below it).

How unusual the bet is: elevated (limited comparison data)

Valuation X-Ray

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 5.8%); the inversion above states its own rate.

Per-Model Detail (n=2)

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• Occupancy is the entire business, and it is moving: weighted average occupancy reached 82.4% in the second quarter of 2026, up 230 basis points on the year, with June alone at 82.5%.
• Assisted living and memory care is where the money is, not independent living: the FY2025 10-K puts that segment at 2.103 billion dollars of resident and management fee revenue, 68.9% of the total, against 593.8 million for independent living and 345.6 million for continuing care communities.
• Against 42.4 million dollars of trailing operating profit sits roughly 4.06 billion of net funded borrowings, about 96 times operating profit, and a share count that has grown about 6.4% a year since March 2022; second-quarter results land after the close on August 10, 2026.

Bull Case

One number decides this company, and it is not revenue and not margin. It is the share of apartments with someone living in them. Weighted average occupancy across the portfolio reached 82.4% in the second quarter of 2026, 230 basis points above the year before, and June came in at 82.5% with the highest monthly net move-ins of the year so far. The reason that matters more than anything else on the income statement is the cost structure underneath it. A senior living community is staffed, heated, insured and maintained whether the apartment at the end of the hall is occupied or empty. Fill it and most of the rent arrives with only the marginal cost of that resident's care attached. A company earning a 1.3% operating margin on 3.15 billion dollars of revenue is not a business without economics. It is a business a few points of occupancy from a different income statement.

The mix helps, and it is not the mix the name suggests. The FY2025 10-K reports assisted living and memory care at 2.103 billion dollars of resident and management fee revenue, 68.9% of the total, with independent living at 593.8 million, or 19.4%, and continuing care retirement communities at 345.6 million. That weighting matters because assisted living and memory care serve residents who need help with daily activities. Independent living competes against staying in your own house. Assisted living and memory care compete against an adult child trying to manage a parent's medication schedule from another state. One of those is a lifestyle decision and one is not, and the need-driven end is nearly three quarters of the revenue.

Supply is the quiet part of the bull case. The 10-K observes that construction starts "have decreased significantly in recent years compared to the decade prior to the start of the COVID-19 pandemic" and that "labor cost pressures, higher construction costs, elevated interest rates, and tighter credit conditions may continue to impact new constructions starts and competitive new openings for a period of time". Buildings take years to permit and build. When new supply is constrained while the population that needs the product grows, the operator with the buildings already standing gets to raise rates. That is showing up: revenue per available unit rose 8.2% year over year in the first quarter of 2026.

The portfolio itself is being reshaped rather than defended. More than 100 communities have been exited since early 2025, with roughly 200 million dollars of disposition proceeds expected during 2026, and maturities have been pushed further out. Selling weak communities raises the average occupancy and average rate of what remains without any operating improvement at all, and it converts illiquid real estate into cash that reduces borrowings. The net loss narrowed to 7 million dollars in the first quarter of 2026 from 65 million a year earlier. That is not profitability yet. It is the distance to profitability closing at a visible rate, which is the only thing this equity needs.

Bear Case

The capital structure is not a feature of this company. It is the company. Net funded borrowings run about 4.06 billion dollars, and once the lease obligations attached to the communities it does not own are counted the figure sits closer to 5.24 billion. The market value of all the shares is about 3.6 billion. Trailing operating profit, the cash the business actually threw off from running those communities, was 42.4 million dollars. Set the borrowings against that profit and the ratio is roughly 96 times operating profit. What a shareholder owns here is the residual slice of a heavily mortgaged real estate portfolio operated at almost no margin, and residual slices move violently in both directions.

The financing is arranged community by community, which spreads the risk and also spreads the contagion. The 10-K describes non-recourse mortgage financing of 205.0 million dollars secured by first mortgages on 16 communities, bearing interest at "the one-month SOFR plus 2.30 %" and interest-only for the first three years. Floating-rate, interest-only, secured on specific buildings. The company states it has "completed the refinancing of all of our mortgage debt maturities due in 2026", which is genuine progress, and then names the live risk directly: an inability to obtain refinancing proceeds sufficient to cover 2027 and later maturities. The filing also spells out what failure looks like, warning that an event of default "could trigger cross-default provisions in our other debt and lease documents" and could allow lenders to foreclose on mortgaged communities and terminate leasehold interests. A portfolio financed in pieces can unravel in pieces.

Equity holders have also been paying for the wait. The share count has risen about 6.4% a year since March 2022, so the recovery in occupancy is being divided across a steadily larger base. And the requirement embedded in the price is long rather than steep. At roughly 209 times company-wide operating income, inverting the price produces operating profit growing at the fastest pace internal cash flow can fund, held for something like fourteen years. That solve is approximate and moves a lot with the assumed cost of capital, a single percentage point shifting the required horizon by around three years, so treat the number as a shape rather than a measurement. The shape is still the point. Among comparable fast-growers, only about 14% sustained that kind of pace even ten years. The price is not betting that the recovery happens. It is betting the recovery runs, uninterrupted, for longer than most recoveries last.

The operating comparison is the uncomfortable one. ENSG earns an 8.5% operating margin on 5.27 billion dollars of revenue growing 19.2%, NHC earns 8.5% on 1.53 billion growing 10.3%, and ADUS earns 9.8% on 1.45 billion growing 19.6%. These are adjacent care businesses rather than direct comparisons, and they lean toward skilled nursing and home health. But they hire from the same labor pool, buy the same food, and serve overlapping families, and they convert revenue to operating profit at something like six or seven times the rate this one does. The 10-K attributes rising costs partly to "increases in wage rates and food" costs. Wage inflation in a business with a 1.3% operating margin does not compress profit. It erases it.

Valuation

Begin with what is actually being bought. The shares are worth about 3.6 billion dollars in total, and the borrowings ahead of them run about 4.06 billion on a funded basis, or closer to 5.24 billion once lease obligations on the communities the company does not own are included. Put those together and the enterprise is roughly 8.9 billion dollars, of which the equity is the thin top layer. This is not a valuation subtlety. It is the single most important fact about the security, and it means small changes in the operating result produce large changes in what the shares are worth.

The profit that layer sits on is currently very small. Trailing revenue is about 3.15 billion dollars, trailing operating income 42.4 million, and the trailing bottom line a loss of 204.6 million. That is why the price works out to roughly 209 times company-wide operating income: not because the market is paying an extravagant multiple of normal earnings, but because current earnings are barely there. Inverting the price under the model's assumptions gives operating profit compounding at the ceiling a business can fund from its own cash flow, held for about fourteen years. Hold that loosely. The result moves a great deal with the assumed cost of capital, and it is a bound rather than a measurement. What survives the imprecision is the direction: the price requires a recovery that runs uninterrupted for well over a decade, and among comparable fast-growers only about 14% sustained that kind of pace across a decade.

The operating lever that would change all of it is occupancy, and it is disclosed monthly. Weighted average occupancy was 82.4% in the second quarter of 2026, 230 basis points better than a year earlier. On a portfolio generating over three billion dollars of annual revenue against a largely fixed cost base, that kind of movement is worth real money at the operating line, which is exactly why the equity trades on occupancy releases rather than on earnings multiples.

The peer set sets the scale of what recovery would mean. ENSG converts 8.5% of 5.27 billion dollars of revenue into operating profit, PACS converts 7.0% of 5.43 billion, and NHC 8.5% of 1.53 billion. None of them carries this leverage, and all of them lean further toward skilled nursing than toward senior housing, so the comparison is directional rather than exact. But it locates the destination. A senior care operator running well earns high single digits at the operating line. This one earns 1.3%. The gap between those two figures, applied to three billion dollars of revenue, is worth several times the current operating profit, and it is what the price is reaching for.

On the downside, the balance sheet offers little cushion. Liquid assets stand near 270.1 million dollars against gross borrowings of about 4.33 billion, much of it floating-rate and secured on individual communities, and the share count has grown about 6.4% a year since March 2022. What moves this equity is not the multiple applied to profits. It is the direction of the occupancy line running against a cost base and a debt stack that do not move with it.

Catalysts

The most recent disclosure was not an earnings report at all. On July 9, 2026 the company published its June occupancy figures, and they continued the trend: second-quarter weighted average occupancy of 82.4%, up 230 basis points year over year and 30 basis points sequentially, with June itself at 82.5%, up 200 basis points. On a same-community basis June occupancy was 83.0%, 90 basis points better than a year earlier, and the month produced the highest net move-ins of 2026 so far. Monthly occupancy disclosure is unusual, and for a business with this much operating leverage it is the most informative thing the company publishes.

The first quarter, reported on May 6, 2026, showed the same pattern converting into the income statement. Revenue per available unit rose 8.2% year over year, occupancy improved 280 basis points to 82.1%, and the net loss narrowed to 7 million dollars from 65 million in the same quarter of 2025. Management reiterated its full-year 2026 target of 8% to 9% growth in revenue per available unit alongside those results. Rate is doing as much work as occupancy, which matters because rate increases do not require finding new residents.

The portfolio itself is the third moving piece. More than 100 communities have been exited since early 2025, with roughly 200 million dollars of disposition proceeds anticipated during 2026 and debt maturities pushed further out. Second-quarter results are due after the market closes on August 10, 2026, with the call the following morning. The question that print answers is whether the occupancy and rate gains are reaching the operating line fast enough to matter against the borrowings sitting in front of them.

Peer Cohorts (Per Segment, With Filing Citations)

Independent Living / CCRCs (reported)

• ENSG (ENSIGN GROUP, INC)
• FY2025 10-K: …and other ancillary operations comprise approximately 4.6% of our annual revenue. Senior Living - As of December 31, 2025, we had an aggregate of 3,402 senior living units across 47 operations, of which 31 were located on the same site location as our skilled nursing care operations. Our senior living communities…
• FY2025 10-K: …subsidiaries and therefore eliminated in consolidation. Other - Within our senior living operations, we generate revenue primarily from private pay sources, with a portion earned from Medicaid payors or through other state-specific programs. Payment for these services varies and is based upon the service provided.…
• NHC (NATIONAL HEALTHCARE CORP)
• FY2025 10-K: …competitive with other market rates. ● Medical Specialty Units. All our skilled nursing facilities participate in the Medicare program, and we have expanded our range of offerings by the creation of facility-specific medical specialty units such as our memory care units and sub-acute nursing units. Our trained staff…
• FY2025 10-K: …for the active and ambulatory elderly and provide various ancillary services for our residents, including restaurants, activity rooms and social areas. Charges for services are paid from private sources without assistance from governmental programs. Independent living facilities may be licensed and regulated in some…
• PACS (PACS Group, Inc.)
• FY2025 10-K: …care, assisted living, and independent living options in some of our communities. As of December 31, 2025, our portfolio consisted of 321 post-acute care, assisted living, and independent living facilities across 17 states serving over 31,700 patients daily. We believe our significant historical growth has been…
• FY2025 10-K: …investigation and with ongoing investigations are included in general and administrative expense. We anticipate that general and administrative expense as a percentage of revenue will vary from period to period, but we expect to leverage these expenses over time as we grow our revenue. Depreciation and Amortization…

Assisted Living and Memory Care (reported)

• ENSG (ENSIGN GROUP, INC)
• FY2025 10-K: …and patient transportation to people in their homes or at long-term care facilities. To date, these businesses were not meaningful contributors to our operating results. GROWTH We have an established track record of successful acquisitions. Much of our historical growth can be attributed to implementing our expertise…
• FY2025 10-K: …and other ancillary operations comprise approximately 4.6% of our annual revenue. Senior Living - As of December 31, 2025, we had an aggregate of 3,402 senior living units across 47 operations, of which 31 were located on the same site location as our skilled nursing care operations. Our senior living communities…
• NHC (NATIONAL HEALTHCARE CORP)
• FY2025 10-K: …competitive with other market rates. ● Medical Specialty Units. All our skilled nursing facilities participate in the Medicare program, and we have expanded our range of offerings by the creation of facility-specific medical specialty units such as our memory care units and sub-acute nursing units. Our trained staff…
• FY2025 10-K: …for the active and ambulatory elderly and provide various ancillary services for our residents, including restaurants, activity rooms and social areas. Charges for services are paid from private sources without assistance from governmental programs. Independent living facilities may be licensed and regulated in some…
• PACS (PACS Group, Inc.)
• FY2025 10-K: …care, assisted living, and independent living options in some of our communities. As of December 31, 2025, our portfolio consisted of 321 post-acute care, assisted living, and independent living facilities across 17 states serving over 31,700 patients daily. We believe our significant historical growth has been…
• FY2025 10-K: …for routine capital expenditures at our facilities to keep them competitive in their respective markets, to the extent that competitive forces cause those expenditures to increase in the future, our financial condition may be negatively affected. Our policy is to comply with laws prohibiting kickbacks and referral…
• ADUS (Addus HomeCare Corp)
• FY2025 10-K: …than the provision of similar services in institutional settings for long-term care. We plan to continue our revenue growth and enhance our competitive positioning by executing on the following growth strategies: 6 Table of Contents Consistently Provide High-Quality Care We schedule and require our caregivers to…
• FY2025 10-K: …input to the responsible government personnel, provider associations and consumer advocacy groups. We also focus on establishing new and maintaining existing referral relationships with various managed care organizations that contract with the states to service the Medicaid programs. We believe these relationships…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.